2019 (4) TMI 1465 - HC - Customs

Non-compliance with the pre-deposit - Whether on the facts and in the circumstances of the case and in law was the Tribunal justified in dismissing the appellant's appeal for noncompliance of an order on pre-deposit even when it notices that rectification application to rectify the order on pre-deposit was pending? HELD THAT - The Appellant did not appear before the Tribunal on 17th October, 2016 (when order of pre-deposit was made) nor on 19th December, 2016 (when appeal itself was dismissed). This inspite of notice. Nevertheless, the Tribunal had on 19th December, 2016 itself noted the fact as recorded in the impugned order that an application for rectification of the order dated 17th October, 2016 was pending for consideration. The Tribunal ought not to have disposed of the appeal finally for noncompliance with the earlier order dated 17th October, 2016 without first considering the Appellants' rectification application. This, the Tribunal is obliged to do even in the absence of the party. Therefore, the fair and just thing for the Tribunal to do was to list the Rectification Application on board and dispose of the same before taking up the appeal for final disposal. This the Tribunal did not do. In fact, this manner of dealing with an appeal by the Tribunal is deprecated. This only leads to injustice and multiplicity of proceedings. The substantial question of law is answered in the negative i.e. in favour of the Appellant-Assessee and against the Respondent-Revenue.

Summary

Issues involved:
Challenge to dismissal of appeal for noncompliance with pre-deposit order; Rectification application pending before the Tribunal; Proportionality of penalty imposed.

Analysis:
The judgment pertains to an appeal challenging the dismissal of the Appellant's appeal by the Customs Excise and Service Tax Appellate Tribunal (the Tribunal) for failure to comply with the pre-deposit order. The Appellant had been directed to deposit 20% of the penalty amount confirmed by the adjudicating authority to entertain the appeal on merits. The Appellant raised a question of law regarding the Tribunal's justification for dismissing the appeal despite a pending rectification application to rectify the pre-deposit order. The High Court admitted the appeal on the substantial question of law and proceeded to take up the appeal for final disposal due to the narrow compass of the dispute.

The penalty of ?1.37 Crores was imposed on the Appellant by the adjudicating authority, which led to the appeal to the Tribunal. The Appellant sought dispensation from the pre-deposit requirement under Section 129E of the Customs Act, 1962. Despite an application for rectification/modification of the pre-deposit order, the Tribunal dismissed the appeal on December 19, 2016, as the Appellant failed to deposit the required amount. The Tribunal acknowledged the pending rectification application but proceeded with the dismissal, prompting the appeal to the High Court.

The High Court found that the Tribunal erred in not considering the Appellant's rectification application before dismissing the appeal for noncompliance with the pre-deposit order. The Court emphasized the importance of due process and fair consideration, criticizing the Tribunal's approach for leading to injustice and unnecessary proceedings. Consequently, the substantial question of law was answered in favor of the Appellant, and the impugned order was set aside. The appeal was restored to the Tribunal for fresh consideration, with directions to prioritize the rectification application before deciding on the appeal. The Tribunal was instructed to dispose of the rectification application promptly and then proceed with the appeal expeditiously.

In conclusion, the High Court allowed the appeal, emphasizing the Tribunal's obligation to address pending rectification applications before finalizing appeal decisions. The judgment underscores the significance of procedural fairness and efficient resolution of legal disputes to prevent undue delays and ensure justice for the parties involved.